Our Goal: Optimize sector and security selection within duration segments
We believe each insurance client is inherently unique and requires a customized investment strategy that matches its liability profile. AAM’s investment grade fixed income strategy offers insurers a diversified investment grade portfolio that emphasizes stable income, predictable cash flows and stable credit ratings. AAM is designed for the insurance industry. Insurance portfolios require a yield-oriented approach within a risk-controlled framework that minimizes credit impairments and delivers competitive return over a market cycle.
- Portfolio duration establishment based on client liabilities and surplus
- Cash flows laddered across maturities
- No interest rate bets
- Call risk managed prudently
AAM believes the best way to capture equity market return is through a liquid, low-cost passive strategy utilizing Exchange-Traded-Funds (ETF). This eliminates the need for labor-intensive active management which usually underperforms the market in the long run. Periodic rebalancing removes guesswork and emotion from equity investing. Bookkeeping and financial reporting is simplified due to reduced trading volume and less portfolio line items.
Commercial Mortgage Loans (CMLs)
Commercial Mortgage Loans, which are collateralized by income-producing commercial real estate, are a staple of institutional investor portfolios. AAM offers our insurance clients the ability to invest in Core Commercial Mortgages which seek to provide an attractive spread, principal protection, diversification, and call protection. CMLs are provided by Securian Asset Management.
The goal of our convertible strategy at AAM is to enhance long-term portfolio returns. To achieve these results, we rely on a proprietary valuation model/methodology that identifies undervalued convertible securities exhibiting favorable risk/return characteristics. Convertible Bonds are managed by Zazove Associates, LLC.
High Yield Bonds
High Yield (below investment grade) and Bank Loan strategies offer insurance companies enhanced income potential with desirable diversification benefits. In addition to the income benefits of the asset class, the performance of high yield bonds has been similar to equities over the past two decades with dramatically less volatility. High Yield is managed by Muzinich & Co.